Exclusive - German union chief to VW Tennessee workers: Join UAW

Volkswagen employees work on the assembly line of the 2012 VW Passat in Chattanooga Tennessee, December 1, 2011.Billy Weeks

DETROIT (Reuters) - The United Auto Workers has won the backing of the head of an influential German union in its effort to represent the hourly workers at Volkswagen AG's (VOWG_p.DE) Chattanooga, Tennessee, assembly plant.

"In Chattanooga, you need union representation" to negotiate working conditions, IG Metall President Berthold Huber said in a letter distributed in early March to the plant's 2,350 hourly employees. A copy of the letter was obtained by Reuters.

"We strongly recommend that the eligible employees at Volkswagen, Chattanooga, decide that the UAW should represent them," he added.

Huber's letter is another positive sign for the UAW. Last week, Horst Neumann, VW's board member in charge of human resources, said the company was in talks with the UAW about setting up a German-style labour board at the Tennessee factory.

Neumann's comments marked an about-face for an automaker that has resisted opening the U.S. plant to the UAW. Along with Huber's letter, they indicate that support is building for the union, whose president, Bob King, has said organizing U.S. plants run by foreign automakers is crucial to the union's survival.

One person familiar with the UAW's thinking said the German automaker is so large that whether the Tennessee plant remains non-union is not a top priority to its senior executives.

"They've got a lot of fish to fry," said the person, who asked not to be identified.

SYMBOLIC VICTORY?

If the UAW were to succeed, it would be the first time the American union had organized a major foreign automaker's plant since a VW plant in Pennsylvania closed in the late 1980s. Excluding its joint venture plants in China, Tennessee is home to VW's only non-union factory.

UAW membership has plunged from 1.5 million in 1979 to 380,000 in 2011, with workers from General Motors Co (GM.N), Ford Motor Co (F.N) and Chrysler Group FIA.MI now representing about a third of the total, down from three-quarters in the 1970s. Union membership remains concentrated in the Midwest and Northeast.

Industry executives and analysts have said that organizing the Chattanooga plant could be transformative for the UAW, possibly opening the door to similar success at U.S. plants owned by Daimler AG's (DAIGn.DE) Mercedes and BMW (BMWG.DE), as well as Japanese and South Korean automakers. Separately, the UAW continues efforts to organize workers at Nissan Motor Co (7201.T) plants in Tennessee and Mississippi.

When the UAW reinvigorated efforts to organize foreign-owned U.S. plants in 2010, it initially targeted the German automakers because of the supervisory board seats held by labour officials in that country. Under co-determination policies, labour leaders in Germany have a voice in company decisions.

Union officials see a U.S. version of the German labour board as a new, less-adversarial approach that would weaken much anti-union rhetoric. They also have pointed out that workers in Tennessee, as a "right to work" state, can simply opt out of union membership if they desire.

Historically, the U.S. South has been hostile to unions, but King has been eager to convince sceptics that the UAW is now more cooperative with management. UAW officials have said that the union wins the backing of workers when companies remain neutral in organizing drives, even in the South.

King previously has cited the union's four-year labour contracts with GM, Ford and Chrysler in 2011 as an example of the UAW's greater flexibility by cutting overall labour costs.

Neumann, whose comments surprised many VW officials in Germany and the United States, said the company may release a plan for the works council labour board in May or June and that formal talks with a union could begin as soon as the second half of the year if VW's managing board approves. Neumann is also a member of IG Metall, Germany's largest union, which also represents VW workers in that country.

POPULARITY PROBLEM

On Monday, King said the UAW was interested in the works council model and looked forward to talks with VW. The UAW has declined to comment further.

A spokesman for IG Metall also declined to comment. VW officials have repeatedly said any choice of formal representation by a union in the United States would be based on a vote by the workers.

The UAW and IG Metall have for several years discussed representation at the Chattanooga plant, where the company builds the Passat sedan.

"A lot more has been in done in Germany on this than previously understood," said a person familiar with the situation.

The person, who asked not to be identified, said the labour board's creation was not a done deal. The UAW would first need to be recognized in the plant before the German-style labour board could be established.

That could pose a problem, however, as an employee's comments during a meeting in the plant a year ago about not needing a union were met with loud applause and cheers from co-workers.

The UAW remains unpopular with local politicians and manufacturing officials.

"I've talked to a number of employees in Chattanooga, and they are very comfortable with the way things are now," Tennessee Governor Bill Haslam said in a statement. "I would hate for anything to happen that would hurt the productivity of the plant or to deter investment in Chattanooga."

Don Jackson, an industry consultant who was VW's U.S. manufacturing chief until last June, said regardless of the structure of a labour board, he remains resistant to the UAW.

"I feel strongly that the unions had a place once upon a time and there's not really a place for them now," he said.

Additional reporting by Deepa Seetharaman in Detroit and Jan Schwartz in Hamburg; editing by Matthew Lewis